U.S. equities opened Friday, December 5, 2025, with a mixed but generally positive tone, as investors digested a flurry of corporate news and awaited crucial inflation data. Major market indexes saw slight gains in early trading, positioning Wall Street near its all-time highs as the week draws to a close. The overarching sentiment remains cautious, however, with a keen eye on upcoming economic indicators and the Federal Reserve's next move on interest rates.Market Indexes Show Modest Opening GainsAs the tr ...

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Victoria's Secret (NYSE:VSCO) Q3 2026 Earnings Call December 05, 2025 08:30 AM ET Company ParticipantsDana Telsey - CEO and CROScott Sekella - CFO and COOMarni Shapiro - Founding PartnerBrooke Roach - VP of Equity ResearchIke Boruchow - Managing Director - Retailing and E-commerceJonna Kim - Equity ResearchPriya Trivedi - SVP and Global Head of Investor RelationsMauricio Serna - Executive DirectorHillary Super - CEOConference Call ParticipantsAdrienne Yih - Managing Director, Consumer Discretionary AnalystM ...

Financial Data and Key Metrics Changes - The company reported net sales of $1.47 billion, an increase of 9% year-over-year, with adjusted gross margin expansion of 170 basis points and earnings growth of 45% [8][27][32] - Adjusted operating income for the third quarter was break-even, better than the guidance of an adjusted operating loss of $35 million to $55 million [33][34] - Adjusted net loss per share was $0.27, significantly better than the guidance of $0.55 to $0.75 [34] Business Line Data and Key Metrics Changes - The intimates business returned to growth, up mid-single digits, gaining over 1% share in the U.S. intimates market [6][15] - PINK achieved double-digit sales growth, with a notable return to growth in intimates for the first time in years [17][19] - The beauty business grew low single digits, building on last year's mid-teens increase [20][30] Market Data and Key Metrics Changes - International retail sales grew over 30% during the quarter, driven by exceptional performance in China, particularly in the digital channel [8][31] - The company gained over 1% market share in the U.S. intimates market despite the overall market decline [24][30] Company Strategy and Development Direction - The company is focused on a "Path to Potential" strategy built around four pillars: supercharging bra authority, recommitting to PINK, fueling growth in beauty, and evolving brand projection [5][13][19] - The strategy aims to enhance customer acquisition and retention, with a strong emphasis on innovation and emotional connection with customers [12][14][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute the strategy and deliver strong results, particularly heading into the holiday season [25][45] - There is caution regarding potential consumer pullback post-holiday, but the company remains optimistic about maintaining momentum [45][76] Other Important Information - The company raised its full-year outlook for net sales to a range of $6.45 billion to $6.48 billion, compared to previous guidance [36][37] - Adjusted operating income guidance for fiscal year 2025 was raised to $350 million to $375 million [37] Q&A Session Summary Question: How is the company maintaining momentum post-fashion show? - Management noted strong traffic and engagement, particularly in stores, and emphasized the importance of the Path to Potential initiatives [48][49] Question: Can you elaborate on strategies to reduce promotions? - The company is pulling back on promotions while utilizing gifts with purchase (GWPs) to drive customer engagement and higher average order values [51][52] Question: What is the profile of new customers being acquired? - New customer acquisition is focused on the 18-24 age group, with a noted increase in higher average order values [55][56] Question: Is a low double-digit EBIT margin achievable? - Management believes a low double-digit operating margin is achievable over the next couple of years, supported by growth and disciplined expense management [58][59]

Financial Data and Key Metrics Changes - The company reported net sales of $1.47 billion, an increase of 9% year-over-year, with adjusted gross margin expansion of 170 basis points and earnings growth of 45% [6][27][32] - Adjusted operating income for the third quarter was break-even, better than the guidance of an adjusted operating loss of $35 million to $55 million [33][34] - Adjusted net loss per share was $0.27, significantly better than the guidance of $0.55 to $0.75 [34] Business Line Data and Key Metrics Changes - The intimates business returned to growth, up mid-single digits, gaining over 1% share in the U.S. intimates market [5][14] - PINK achieved low double-digit sales growth, marking a significant recovery [17][30] - The beauty business grew low single digits, building on last year's mid-teens increase [20][30] Market Data and Key Metrics Changes - International retail sales grew over 30% during the quarter, driven by exceptional performance in China, particularly in the digital channel [6][31] - The company gained market share in the U.S. intimates market despite an overall market decline [25][62] Company Strategy and Development Direction - The company is focused on four strategic pillars: supercharging bra authority, recommitting to PINK, fueling growth in beauty, and evolving brand projection and go-to-market strategy [4][12][19] - The Path to Potential strategy aims to create a powerful multiplier effect, unlocking greater value across the ecosystem [4][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute the strategy and deliver a strong holiday season, despite being cautious about potential consumer pullback post-holiday [25][45] - The company raised its full-year outlook for net sales to a range of $6.45 billion to $6.48 billion, reflecting strong momentum [35][36] Other Important Information - The Victoria's Secret fashion show significantly boosted brand engagement, resulting in nearly 9 million new social followers and 51 billion total media impressions [9][10] - The company is investing in talent to scale its beauty business and enhance its innovation pipeline [20][21] Q&A Session Summary Question: How is the company maintaining momentum post-fashion show? - Management noted strong traffic and engagement, particularly in stores, and emphasized the importance of the Path to Potential initiatives [46][47] Question: Can you elaborate on strategies to reduce promotions? - The company is pulling back on promotions while utilizing gifts with purchase (GWPs) to maintain customer value, contributing positively to gross margin [49] Question: What is the profile of new customers being acquired? - New customer acquisition is focused on the 18-24 age group, with a noted increase in higher average order values [51][52] Question: What is the outlook for operating margins? - Management believes a low double-digit operating margin is achievable over the next couple of years, supported by growth and disciplined expense management [53] Question: What is the cadence of monthly comps in Q3? - Strong performance was noted throughout Q3, with significant amplification in October due to the fashion show, sustaining momentum into November [60][61]

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Financial Performance - Q3 2025 - Net sales increased by 9%, driven by growth across Victoria's Secret, PINK, and Beauty[4] - International net sales surged by 34%[4] - Adjusted gross margin improved by 170 basis points to 365%[4,7] - Adjusted operating income reached $0 million, exceeding the guidance of an adjusted operating loss of ($35 million) - ($55 million)[4] - Adjusted EPS was reported at ($027), surpassing the guidance of ($055) - ($075)[6] Financial Performance - Year-to-Date 2025 - Net sales increased by 4% to $42836 million[9] - Operating income increased by 18% to $868 million[9] - Net income attributable to Victoria's Secret & Co increased by 1036% to $125 million[9] - Net income per diluted share attributable to Victoria's Secret & Co increased by 1400% to $015[9] Outlook - The company anticipates full-year net sales to be approximately $645 billion to $648 billion[14] - The company anticipates full-year adjusted operating income to be approximately $350 million to $375 million[14]

Victoria's Secret (VSCO) shot higher in early trading after setting a positive tone on the holiday season with its third-quarter earnings report. Sales rose 9% to $1.35 billion during the quarter that ended on November 1 to top the consensus estimate, driven ...

Financial Performance - Net sales in Q3 2025 increased by 9% to $1.472 billion compared to Q3 2024, with a 34% increase in international channel sales[106] - For the third quarter of 2025, net sales increased by $125 million, or 9%, to $1.472 billion compared to $1.347 billion in the third quarter of 2024[128] - Year-to-date 2025 net sales increased by $160 million, or 4%, to $4.284 billion compared to $4.124 billion in year-to-date 2024[144] - North America year-to-date net sales increased by $58 million, or 3%, to $2.325 billion, despite a decrease in traffic[145] - International year-to-date net sales rose by $124 million, or 22%, to $691 million, driven by increases in sales in China and franchise royalties[147] Operating Income and Expenses - Operating loss improved by $28 million to $19 million in Q3 2025, with the operating loss rate improving to (1.3%) from (3.5%) in Q3 2024[107] - Gross profit for the third quarter of 2025 increased by $68 million to $536 million, with a gross profit rate rising to 36.4% from 34.8%[132] - General, administrative, and store operating expenses increased by $40 million, or 8%, to $555 million, primarily due to higher marketing and store selling expenses[136] - For year-to-date 2025, general, administrative, and store operating expenses increased by $58 million, or 4%, to $1.487 billion compared to year-to-date 2024[152] Sales Performance - Sales per average selling square foot increased by 8% to $137 in Q3 2025 compared to Q3 2024[120] - Comparable sales in North America increased, driven by higher average transaction value and conversion rates[106] - North America store net sales rose by $40 million, or 5%, to $778 million, driven by an increase in average transaction value despite flat overall traffic[129] - International net sales surged by $67 million, or 34%, to $265 million, primarily due to increases in sales in China and sourcing sales to partners[131] Tax and Losses - Adjusted net loss per diluted share was $(0.27) in Q3 2025, compared to $(0.50) in Q3 2024[116] - The effective tax rate for the third quarter of 2025 was 16.0%, down from 21.3% in the third quarter of 2024[139] - The effective tax rate for year-to-date 2025 was (42.9%), a significant increase from (7.8%) in year-to-date 2024, primarily due to additional tax expenses related to share-based compensation[155] Cash Flow and Debt - Net cash used for operating activities in year-to-date 2025 was $174 million, a decrease of $75 million compared to year-to-date 2024, driven by lower net operating cash outflows associated with working capital changes[162] - Net cash used for investing activities year-to-date 2025 was $163 million, consisting solely of capital expenditures related to store capital programs and technology investments[164] - Net cash provided by financing activities year-to-date 2025 was $360 million, primarily from borrowings of $545 million under the ABL Facility[167] - As of November 1, 2025, total long-term debt was $1.347 billion, a decrease from $1.414 billion as of November 2, 2024[173] Capital Expenditures and Investments - The company expects capital expenditures to be approximately $200 million for fiscal year 2025, focusing on store capital programs and technology investments[166] - The company’s investment portfolio primarily consisted of money market funds and bank deposits, with no material risk to principal associated with interest rate changes[195] Compliance and Credit Ratings - The company was in compliance with all covenants under its long-term debt and borrowing facilities as of November 1, 2025[183] - The company's credit ratings as of November 1, 2025, were Ba3 from Moody's and BB from S&P for corporate ratings, with a stable outlook[184] Strategic Focus - The company continues to focus on its strategic plan, including enhancing its Bra Authority and fueling growth in beauty[110] Store Operations - The total number of company-operated stores decreased by 61 to 1,404 as of November 1, 2025, with 12 new stores opened and 26 closed in the U.S.[121] Security Incident - A security incident in May 2025 estimated to have negatively impacted Q2 2025 net sales by approximately $20 million[113] Working Capital and Liquidity - The company had a working capital of $454 million as of November 1, 2025, compared to $260 million as of November 2, 2024[159] - The availability under the ABL Facility was $358 million as of November 1, 2025, down from $533 million as of February 1, 2025[160] Long-term Debt Structure - The principal value of the company's outstanding long-term debt was $984 million as of November 1, 2025, with an estimated fair value of $960 million[197] - The company’s long-term debt includes $375 million under the ABL Facility and $384 million under the Term Loan Facility, both of which have variable interest rates based on Term SOFR[196] - The company amended its ABL Facility, extending the maturity date to May 2030 and reducing the applicable interest rates on borrowings to 1.50%-1.75% for Term SOFR loans and 0.50%-0.75% for alternate base rate loans[178] Accounting Standards - The company is evaluating the impact of recently issued accounting standards on its consolidated financial statements, with no material changes expected from the standards adopted in 2025[186][189]

Core Insights - Victoria's Secret achieved its highest quarterly sales growth in over four years, indicating a significant turnaround in performance [1] Sales Performance - The chain reduced promotions and focused on selling more products at full price, which contributed to the sales growth [1]